2nd Circuit affirms dismissal in FCRA suit

Courts Appellate Second Circuit FCRA Bankruptcy Student Lending Discharge Credit Reporting Agency Consumer Finance

On January 4, the U.S. Court of Appeals for the Second Circuit affirmed a district court’s decision to grant summary judgment for a credit reporting agency (defendant) in a suit alleging FCRA violations. According to the opinion, four years after the plaintiff took out a student loan, he filed for bankruptcy protection. The bankruptcy court issued a final decree of discharge, which released the plaintiff from all “dischargeable debts,” but did not specifically indicate that the loan was discharged. The student loan servicer indicated that the student loan was not discharged, and the plaintiff executed a loan modification agreement with the loan holder and made payments for several years. The plaintiff filed suit against the defendant consumer reporting agency, alleging that it violated the FCRA and New York law for including the loan on his credit report. The district court granted summary judgment in favor of the defendant after determining that the consumer’s loan had not been discharged. The plaintiff appealed.

On appeal, the 2nd Circuit noted that the plaintiff’s claim “hinges on the resolution of an unsettled legal question”: whether the loan was in fact discharged in the bankruptcy proceeding. Making such a determination would have required the defendant to resolve a legal question related to the debt, which the appellate court concluded was not required under the FCRA. As a result, the appellate court affirmed the dismissal of the plaintiff’s complaint because the alleged inaccuracy is not considered to not be an actionable “inaccuracy” under the FCRA.